DRTV: The next generation

When Vertical Branding launched in Encino, CA in 2001, Nancy Duitch and her partner planned to market continuity-based products — includ­ing skin care and anti-aging items such as Bun & Thigh Max and Perfect Lift — exclusively through DRTV ads. And for a while, the channel worked wonders.

“We were strictly direct response, and our continuity programs had three- to five-year life spans,” Duitch explains. “They were extremely prof­itable for us.”

That is, until around the summer of 2004: “We saw media rates start to rapidly increase,” she recalls.

Little by little, the money required to buy 30 minutes of cable airtime started to outpace the revenue it would bring in. The return on invest­ment simply wasn't what it had been even a few months before, and Duitch had no reason to believe the trend would reverse itself soon. By the end of the year, she realized the company needed a multichannel strategy.

No longer a standalone approach

A little more than three years lat­er, Duitch's decision has proven prescient. As media rates have continued to rise and media con­sumption habits have shifted, many marketers who once relied exclusively on DRTV have been all but forced to adopt multichan­nel strategies. DRTV remains a healthy sales channel and is still the centerpiece of many direct marketers' efforts — according to the Direct Marketing Association, total spend in 2007 was $22.8 bil­lion, up 3.6% from 2006, and is projected to reach $24.2 billion in 2008. However, DRTV appears to be losing viability as a standalone sales approach.

For Vertical Branding, the solution was about more than going multi­channel. After taking the company public in 2005, acquiring a product-development company and splitting with her partner, Duitch began devel­oping products in-house and taking them straight to retail. “We basically turned our entire structure and strat­egy upside-down,” she says.

“We either create and develop our own products or we acquire licensed products from inventors,” she explains. “We'll create an ad cam­paign for the Internet and television to drive sales and create brand equity, but you're not going to have huge profits on television. TV is really used to drive profits to retail.”

On the retail side, Vertical Brand­ing now sells to Wal-Mart, Target, Linens 'n Things, CVS, and others. Successful products include Hercu­les Hook, Zorbeez and E-Z Folds, which have become recognizable brand names.

She adds that retail now accounts for about 65% of her sales, while direct response accounts for the rest. Of that remaining 35%, 40% is done through the Internet, with the rest coming from DRTV and a small amount of print.

Changing marketplace realities

It may sound like a shocking admis­sion from the head of a company that worked almost solely in DRTV just a few years ago. But Duitch is hardly alone. Paul Soltoff, chairman and CEO of direct marketing agen­cy SendTec, says that the realities of the marketplace have forced most companies that previously focused solely on DRTV to expand their sales channels, or go out of busi­ness, in the past 25 years.